NVIDIA Corp (NVDA)

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2 Semiconductor Stocks to Watch Amid Oversupply
By: Schaeffer's Investment Research | December 28, 2022

• The pandemic chip shortage has turned into an oversupply

• Both stocks have seen a surge in bearish options

Investors are keeping an eye on the semiconductor sector, after the pandemic chip shortage morphed into an oversupply. Amid the surplus, Nvidia Corporation (NASDAQ:NVDA) and Micron Technology Inc (NASDAQ:MU) are among those in focus.

On the charts, NVDA is on track for its ninth day of losses in the last 10, though the $140 level looks like it could be emerging as support. Year-to-date, Nvidia stock is down 52.4%. Micron stock has struggled to bounce off its Dec. 22 two-year low of $48.43, as the company gears up for its ex-dividend date on Dec. 30. MU is down 46.1% year-to-date.

Both stock's options pits are unusually pessimistic. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Nvidia stock's 10-day put/call volume ratio sits at 1.39, while Micron stock's is at 1.68. Both of these ratios rank higher than all other readings from the past year, showing puts being picked up at much faster-than-usual rate.

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